If you are a business that provides a cleaning or courier service you will need to report payments you make to contractors if;
- the payments are for cleaning or courier services; and
- you have an Australian Business Number (ABN)
The Taxable Payments Annual Report (TPAR) system acts as a tax integrity measure to ensure payments made to contractors are reported to the Australian Taxation Office (ATO) in a similar manner to salary and wages payments to employees. This increases the ATO’s ability to use data matching to track payments being received by contractors in the industry.
Courier services include activities where items or goods are collected from and/or delivered to, any place in Australia using a variety of methods including by truck, car, station wagon, ute, motorcycle, motorised scooter, bicycle or other non-powered means of transport, or on foot.
Courier services do not include:
- passenger transport services e.g. buses and taxis
- transporting of blood, blood products, organs or tissue
- freight transport
Example 1 : Couriers
ABC Couriers Pty Ltd (ABC) is a business with an ABN and provides parcel and delivery services to a range of clients. ABC engages 4 contractors throughout the year to make deliveries. Lee is one of these contractors and provides ABC with an invoice for the deliveries he completes. As a provider of courier services, ABC will need to prepare and lodge a taxable payments annual report detailing payments it makes to contractors, including Lee, that undertake courier activities for them.
Example 2 : Mixed transport
Couriers Express has an ABN and provides courier services. Sometimes they need to send items from Melbourne to Brisbane. They engage couriers to pick up items from their warehouse and deliver them to Air Freight Pty Ltd. Air Freight Pty Ltd flies the items to Brisbane, where couriers collect them at the airport and deliver the items to customers. Courier Express is required to report payments that they make to the contractors to pick up and deliver items at each end of the process. They do not need to report payments they make to Air Freight Pty Ltd as they are not providing a courier service, but rather air freight transport.
Cleaning services include any of the following activities undertaken on a building, residence, structure, place, surface, transport/vehicle, industrial machinery or equipment and for events:
- Interior cleaning
- Exterior cleaning (except sand blasting or steam cleaning)
- Carpet cleaning
- Chimney cleaning
- Gutter cleaning
- Road sweeping and street cleaning
- Swimming pool cleaning
- Park and park facilities cleaning
'Events' include staging of sporting, cultural, scientific, technological, agricultural, or entertainment events and exhibitions.
‘Transport/vehicles’ includes trains, trams, buses, ferries, airplanes, ships, trucks, cars and other motor vehicles.
Example 3 : Cleaners
John and Betty Cleaning Services has an ABN and contracts to clean office buildings and schools in their local area. From time to time, they engage contractors to help them out. As a provider of cleaning services, John and Betty Cleaning Services will need to prepare and lodge a taxable payments annual report detailing payments they make to contractors that undertake cleaning activities for them.
Businesses providing mixed services
If cleaning services are only part of the services your business provides, you will need to work out what percentage of the payments you receive are for cleaning services each financial year to determine if you need to lodge a TPAR.
If the total payments you receive for cleaning services are:
- 10% or more of your GST turnover – you must lodge a TPAR
- less than 10% of your GST turnover – you don't need to lodge a TPAR.
You can choose to lodge a TPAR even if you think you don't need to. For example, if you're not sure if your payments for cleaning services will amount to less than 10% of your GST turnover for the financial year you should ensure you are recording the payments you make to contractors anyway. You can still choose to lodge a TPAR even if you're under the 10% threshold.
Example 4 : Couriers mixed business
Quick Smart Pty Ltd is a business with an ABN that provides clothing repair and alterations services and also courier services. When they’re very busy, Quick Smart engages contractors to carry out their courier services. As Quick Smart is a provider of courier services, they are required to report the payments they make to contractors for courier services.
Example 5 : Cleaners mixed business
123 Cleaners (123) sells cleaning products and occasionally engages contractors to provide cleaning services to clients. As 123 has an ABN and provides cleaning services, it will need to report payments it makes to contractors that undertake cleaning activities for them. Example 6 – Cleaners mixed business Highlight Management Pty Ltd is a business with an ABN that provides a wide range of services including event management, catering, corporate training and cleaning. As Highlight Management provides cleaning services they are required to report all payments they make to contractors that undertake cleaning activities.
Information you need to report
If your business provides cleaning services, you only need to report payments you make to contractors for cleaning activities. Similarly, if your business provides courier services, you only need to report payments you make to contractors for courier activities.
If an invoice you receive from a contractor includes both labour and materials, whether itemised or combined, you are required to report the total amount of the payment.
If you determine that you do need to report, you will need the following payee details to do so:
- the contractor's ABN where known
- the contractor's name and address
- the total amounts you paid the contractor during the financial year, including GST.
The above information is generally available on the contractor's invoice.
Example 6 : Reporting of mixed invoices
Highlight Management Pty Ltd (Highlight Management), a cleaning business, engaged a contractor to clean a school. As part of the contract the contractor is required to provide their own cleaning products for which they charge Highlight Management. At the end of the month the contractor provides Highlight Management with an invoice of $3,300 (including GST) for their cleaning services and cleaning products purchased. The total amount of the invoice of $3,300 is required to be reported.
Information you don't need to report
There are specific payments you don’t report on the Taxable payments annual report:
- Payments for materials only
- Unpaid invoices as at 30 June each year
- Pay as you go (PAYG) withholding payments, such as those you make to employees, as these amounts are reported in your PAYG withholding payment summary annual report
- Payments within consolidated groups – if you’re in a consolidated or multiple entry consolidated group for income tax purposes, you don’t need to report payments you make to another member of that same group. This is because members of a consolidated or multiple entry consolidated group are effectively taxed as a single entity. However, each entity in the group will need to consider if they are a business that provides courier or cleaning services, and report payments they make to contractors outside the consolidated group, for courier or cleaning services respectively. If so, they will need to lodge a report.
How to lodge your Taxable payments annual report
The first annual report for businesses that provide courier and cleaning services is due by 28 August 2019, for the year ending 30 June 2019.
Lodging online is a secure, quick and easy way to lodge your report
You can lodge online through:
- ATO portals - if you have business software that can generate the electronic taxable payments annual report, you can lodge online using the Business, Tax Agent or BAS Agent portals.
- Standard Business Reporting (SBR) - if you have SBR enabled software that has the reporting functionality, you can lodge directly from the software. If you’re unsure, check with your software provider.
Lodging on paper
If you are unable to lodge online, you can order the Taxable payments annual report form (NAT 74109) online or by phoning the ATO publications ordering service, and mail the completed form. You can't make copies of this form – you must use original forms the ATO has printed.